Attorney General of Arkansas — Opinion
Opinion Delivered April 9, 2001
MARK PRYOR, Attorney General
The Honorable David M. Haak State Representative 9 Wood Place Texarkana, AR 71854-3333
Dear Representative Haak:
This is in response to your request for an opinion on the following question:
Can school districts hold their money in financial institutions such as investment brokerage firms, credit unions or savings and loans?
It appears that the answer to this question is “no” under current law.
Arkansas Code Annotated § 19-8-104 (Repl. 1998) states that “[e]xcept as provided in subsections (b) and (c) of this section, all public funds as defined in § 19-8-101 shall be deposited in banks located in the State of Arkansas.” (Emphasis added). Additionally, A.C.A. § 19-8-105
requires the State Bank Commissioner to furnish a list of “banks or banking institutions” insured by the Federal Deposit Insurance Corporation, and provides that “[n]one of these public funds shall be deposited in any bank other than those contained in the list. Id. at subsection (a). Section 19-8-101 defines “public funds” as “any and all kinds of funds handled by treasurers, collectors, commissioners, sheriffs, and clerks.” This clearly encompasses school district funds, which are held either by the district treasurer or the county treasurer See A.C.A. § 19-8-106 (d).
The Arkansas Supreme Court has held that pursuant to the plain meaning of these provisions, savings and loans are not included as public funds depositories. Arkansas State Bank Dep’t v. Ark. League of Sav., 307 Ark. 474, 821 S.W.2d 472 (1991). The Court noted that the General Assembly has either failed or refused to amend the original legislation so as to include savings and loans as banking institutions for the purpose of deposits of public funds. 307 Ark. at 477.
In response to your question, therefore, current law requires that school district funds must be deposited in banks located in Arkansas. This does not include savings and loans, nor in my view does it include investment brokerage firms or credit unions, as these institutions clearly do not constitute “banks or banking institutions.” A.C.A. § 19-8-105(a), supra.
Assistant Attorney General Elisabeth A. Walker prepared the foregoing opinion, which I hereby approve.
MARK PRYOR Attorney General